The Financial Reporting Council’s Executive Counsel has delivered a disciplinary Formal Complaint in connection with the conduct of Mazars LLP and of Mr Richard Karmel in relation to their engagement to provide advice to the Trustee of the First Quench Pension Fund in respect of a proposed replacement of First Quench Retailing Limited as the sponsoring employer of the First Quench Pension Fund, and the advice given by them in that regard.
The Complaint alleges that the conduct of Mazars LLP and of Mr Karmel fell significantly short of the standards reasonably to be expected of ICAEW Members and Member Firms in that they failed to act in accordance with the ICAEW’s Code of Ethics fundamental principles to act with professional competence and due care, to act with objectivity, to respect the confidentiality of information, and to act with integrity.
The alleged misconduct occurred between 5 August 2007 and 18 September 2007 in relation to their engagement by the Trustee to the First Quench Pension Fund to provide:
- A report to the Trustee on the quality of the covenant of First Quench Retailing Limited as at 30 May 2007.
- A report to the Trustee on the quality of the covenant of the Newco assuming the transaction (i.e., the substitution) were to proceed.
- A report to the Trustee on the merits and risks of the transaction. This was finally presented as a report “on the benefits and risks of retaining First Quench Retailing Limited as the sponsoring employer and the benefits and risks of transferring to Newco”.
An independent Disciplinary Tribunal will be appointed to hear the Formal Complaint.
Notes to editors:
- The FRC is responsible for promoting high quality corporate governance and reporting to foster investment. We set the UK Corporate Governance and Stewardship Codes as well as UK standards for accounting, auditing and actuarial work. We represent UK interests in international standard-setting. We also monitor and take action to promote the quality of corporate reporting and auditing. We operate independent disciplinary arrangements for accountants and actuaries; and oversee the regulatory activities of the accountancy and actuarial professional bodies.
- In relation to disciplinary matters, the FRC is the independent, investigative and disciplinary body for accountants and actuaries in the UK dealing with cases which raise important issues affecting the public interest. In brief, the stages of the disciplinary process are:
- Decision to investigate
- Decision whether to bring disciplinary proceedings against Member Firm or Member and, if so decided, referral to Disciplinary Tribunal
- Tribunal hearing
- Determination and imposition of sanction and/or costs orders
The FRC can start a disciplinary investigation in one of two ways: (i) the professional bodies can refer cases to the FRC; and (ii) the FRC may decide of its own accord to investigate a matter. The Conduct Committee will consider each case identified or referred to it and decide whether or not the criteria for an investigation are met.
Investigations are conducted by Executive Counsel and the Professional Discipline team within the Conduct Division. If disciplinary proceedings are commenced, Executive Counsel delivers a complaint to the Conduct Committee. The Conduct Committee then instructs the Convener to appoint a Disciplinary Tribunal.
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